The Motley Fool

Chart of the Week: Differing Fortunes of Singtel and NetLink NBN Trust

NetLink NBN Trust (SGX: CJLU) was “born” out of Singapore Telecommunications Limited (SGX: Z74) in July 2017. Looking at the duo today — boy, we see very different fortunes.

Since NetLink NBN Trust’s IPO, units have risen some 10%, compared to a 21% decline in Singtel shares. In comparison, Singapore’s stock market benchmark, the Straits Times Index (SGX: ^STI), has declined by around 5%.

In my opinion, the vast difference in the share price performances between NetLink NBN Trust and Singtel can be attributed to the underlying strength of their respective businesses.

NetLink NBN Trust has a resilient business model with predictable cash flows. Since the trust is the sole nationwide provider of residential fibre network here, it is hard to knock the company off its perch. NetLink NBN Trust also has several growth drivers, such as providing services to support Singapore’s push to be a Smart Nation and the continued demand for fibre connections from new households.

As for Singtel, the telco is facing intense competition from its peers, M1 and StarHub Ltd (SGX: CC3). Singtel is also battling over-the-top service providers such as Netflix which can offer cheaper price plans with more content. Furthermore, the telco’s overseas subsidiaries are facing intensifying competition, especially in India and Indonesia.

That seems like there’s a lot of pain for Singtel with no end in sight at the moment.

Source: Yahoo! Finance (as of 20 September 2019 9:15 am)

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P owns shares in NetLink NBN Trust.